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In the (gas) pipeline The Iran

Pakistan gas pipeline can bring a lot of relief to the countries in the energy sector

By Raza Khan

The Iran-Pakistan (IP) gas pipeline project has recently received a boost after the announcement by Iranian authorities that their side of the pipeline would be ready by March 20 next year.

But challenges to the pipeline on the Pakistani side raise doubts about its completion as scheduled. National Iranian Gas Company (NIGC) Managing Director, Javad Oji, on August 20 said that Iran’s seventh gas trunk-line from Iranshahr, southeast of Iran to Pakistan border and Zahedan city is 90 percent complete and would start operating in September 2013.

The announcement by Oji has revived the hopes regarding the completion of IP gas pipeline. Tehran has demonstrated exceptional commitment to the project by completing most of its 900 kilometers part of the pipeline. The Iranian steadfastness has been despite heavy opposition to the project.

The need of laying energy pipelines from Iran to Pakistan and further to India has been felt since long in the region, specifically in the last two countries due to their extreme energy deficiencies with Iran the closest possible source of getting cheap oil and gas for them.

But there have been few initiatives and concrete actions from the stakeholders in this regard. After much procrastination Pakistan and Iran signed an agreement in 2010 to go ahead with the construction of the pipeline.

Originally, India was also part of the project and it was then known as Iran-Pakistan-India (IPI) gas pipeline. However, Delhi pulled back apparently due to high cost of the gas which Tehran demanded. However, it is believed that it was either the US pressure or India’s bid to appease Washington which led to her saying adieu to the project.

Still, India must have calculated on the one hand the potential benefits in the form of gas which it required for its fast growing economy and sustaining its current high-levels of economic growth of around nine percent.

The 56-inch diameter IP gas pipeline is approximately 1750 kilometers long of which 900 kilometers fall within Iranian and 850 kilometers inside Pakistani territory. The project once completed would supply 750 million cubic feet (21 million cubic metres) to one billion cubic feet per day gas to Pakistan by mid-2015.

The pipeline would pass from Paras gas-fields in Iran’s southern port city of Assalouyeh in Bushehr Province through to the city of Iranshahr in Sistan-Balochistan province on the border with Pakistani Balochistan province. A third-party financial assessment by a German firm estimated the IP gas pipeline project to cost $1.2-1.5 billion.

However, despite Islamabad’s signing of the project with Iran, it has not been able to take concrete steps to construct its part of the pipeline. There have been multiple impediments to the construction inside Pakistan which include unavailability of funds; nationalist insurgency in Balochistan province, where most of the Pakistani part of the IP pipeline has to be built; and above all pressure from Washington.

Whereas, there has been strong commitment and conviction from Pakistani leaders and authorities right from President Asif Ali Zardari to secretaries of relevant ministries to the project but little has been done to complete it in time.

This has cast a long shadow on the future of the pipeline and has also put Pakistani leaders and officials in a dilemma. “Iranian side of the project is nearing completion but there are several problems on the Pakistan side; Balochistan is in turmoil, availability of finances is another issue and Americans are opposing it tooth and nail and then there is no clear commitment from one of the potentially experienced partners, Russia and China to provide expertise and technology for the IP. Therefore, Pakistan has to show extraordinary resilience to make the project a success,” says Sarfaraz Khan, Director Area Study Centre for Central Asia, Russia, China and Afghanistan, of University of Peshawar.

Due to Washington’s opposition to the IP gas pipeline Islamabad has found it extremely difficult to arrange funds of around $750 million to construct the pipeline on her territory. While the US has been advising Islamabad against going ahead with the project, potential investors have shied away because of precarious security situation in Pakistan.

In Pakistan certain quarters believe Washington supporting Baloch nationalist insurgency, which against the backdrop of US-Iran deep animosity seem somewhat understandable.

After showing some initial interest to provide financial and technological support to the IP project portion inside Pakistan both Russia and China failed to give clear commitment to the project.

Keeping this in view as well as its national interest Tehran has offered Pakistan to give $250 million to complete Pakistani side of the project through the mechanism called ‘supplier’s credit’.

Islamabad has been asking Iran to increase the credit amount to $ 500 million. Pakistan and Iran will resume talks in the first week of September to finalize the arrangement of finances to lay Pakistan’s side of the pipeline. In this regard, both the countries have already set up a Joint Working Group this year.

The US, on a number of occasions, has even threatened Pakistan with sanctions if Islamabad continued to work with Iran on the project. The US has consistently argued that as United Nations has already passed resolutions regarding the Iranian nuclear programme, therefore, if Pakistan proceeded with Tehran on the IP project it would be tantamount to violation of the UN resolutions.

However, Islamabad has argued that the UN resolutions have nothing to do with the IP project as they are regarding Iranian’s nuclear programme. Islamabad has also contended that the project is critically needed by Islamabad to deal with its acute energy crisis that in recent years have resulted in long hours of electricity and natural gas outages.

It is important to note that IP project could not be commissioned in time because of Islamabad’s lack of commitment. Washington is believed to have used every pressure tactic to keep Islamabad at bay from the project and that seems to have worked.

In February this year, State Department spokesperson Victoria Nuland told a briefing in Washington “If, in fact, the pipeline does go forward — and there have been a lot of false starts and backing-and-forthing on that — you know, we have issues of concern. And we’ve been very clear about those with the government of Pakistan.”

However, a time came that the US pressure had to be resisted due to critical energy crisis in the country. Therefore, the ultimate signing of a formal agreement between Pakistan and Iran to start the construction of the much-delayed gas pipeline was an important political and economic development goal.

As soon as the agreement on IP gas pipeline was signed the US started expressing its reservations on the project. Even on one occasion the now deceased US special envoy for Afghanistan-Pakistan (Af-Pak) region, Richard Holbrooke, said in Islamabad that Pakistan should not ‘overcommit’ itself to the project.

The US’s actual opposition on the project is based on the calculation that its biggest beneficiary would be Iran in particular the completion of the pipeline would give the much-needed breathing space to Tehran’s sanctioned-hit economy. Thus projects like IP gas pipeline are in conflict with the US policy of getting around Iran.

This policy is somewhat akin to the policy of Soviet Encirclement or Containment of Communism, which the US pursued during the Cold War (1948-1990) to trounce the ideological and economic challenge which the erstwhile Soviet Union posed.

With regard to Iran, the Americans have already successfully implemented this policy. The US forces’ presence in Iraq (which is now at quite low level) and Afghanistan, two neigbours of Iran, shows the encirclement policy in operation.

The US’s heavy military presence in the Persian Gulf, Indian Ocean and Arabian Sea just outside the territorial waters of Iran corroborates this US policy towards Iran. So, by trying to keep Pakistan away from the gas pipeline project, the US wants to deny Iran the breathing space.

As the economy of Iran is largely dependent on selling its oil and gas riches the construction of the IP gas pipeline is of extreme importance to Iran.

Now the completion of the project is largely dependent on the initiative to be taken Islamabad, particularly about how to resist Washington’s pressure. There are other factors like lack of technological support, unavailability of funds, political instability in Balochistan, etc. If Pakistan could overcome these problems it can proceed with the project despite American threats provided Russia and China give support.

At a time when the US wants Pakistan to give foolproof security to NATO’s Ground Lines of Communications (GLOCs) through the latter’s territory to send supplies to the alliance’s security forces in Afghanistan, Islamabad could use the opportunity as a quid-pro-quo to get Washington’s assurance, even implicitly, that it would not come in the way of the project.

This is all about diplomacy and it depends on how Pakistani interlocutors maximize prospects of serving Islamabad’s interest through acumen and tact.

The writer is a political analyst and research scholar currently pursuing PhD in International Relations, researching roots of religious extremism-terrorism in Pakistan


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